I know an advertising window is set by the receiver to inform the sender not to send more than what is advertised in the receiver's window to avoid packet loss due to overflow of packets at receiver(Flow control). This window size is 16 bits(65535 is the max value). So this limits sender from sending more than 65535 bytes?

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The Window Size field in each TCP header indicates the amount of empty space, in bytes, remaining in the receive buffer. The field is 16 bits in TCP, but with the Windows Scale option, values larger than 65535 can be used. Windows scale option increases the Window Size from 16 bit to 30 bit. Instead of changing the field size, however, the header still holds a 16 bit value, and an option is defined that applies a scaling factor to the 16 bit value. Window Scale RFC is 1323.

Before RFC-1323, the TCP window size was limited to 64K. This implied that without window scaling, TCP could only send 64k of data before waiting for an ACK. This RFC defines a new TCP option that allows a window size larger than 64K of data before window scaling. (TCP/IP Illustrated Vol. 1.)

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